Question of the week: Need to declare upcoming redundancy on mortgage application?

Former_MSE_Dan

Q. I'm going to be made redundant in December. Do I have to declare it on a mortgage application, or can I just state my current employment status? Adam, by email.


Answer. You should always answer the questions honestly. So where it asks you to fill in your job, you are currently working, so you should put your current job down.

Yet it is also likely that the declaration you sign at the bottom of the form (or T&Cs that you tick to agree with) will require you to disclose anything to the lender which could impinge upon your financial situation. There may also be a section which asks you to expand on that.

And if so, as due redundancy is a material fact which will affect how the bank views you as a possible borrower, you need to declare it.

Certainly any mortgage protection insurance would be invalid if you didn't declare it. See the Redundancy Planning guide for help preparing yourself.

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Suzi2412

Please tell me why, in these uncertain times, anyone would want to apply for a mortgage when they're going to be made redundant unless they had another job lined up?

My advice would be to postpone the mortgage application until I found another job, rent for a while and try and save up for a deposit. It's really not worth the risk.

Natalie7_2

This is my first post, but I felt I had to reply as I think Suzi has been somewhat presumptious.

Technically, the answer given by Dan is correct. However, we live in the real world and if someone's mortgage deal is coming to and end and they have found a better deal they should be looking to switch, especially if they are about to be made redundant.

I think a white lie is acceptable here and wouldn't mention the redundancy. At the end of the day when the person is made redundant they are going to find it easier to afford the smaller payments of a better mortgage deal than if they stay with the mortgage they already have which may have higher monthly payments.

I think Suzi assumed that the person was looking to buy a property, but I've worked from the assumption that they already have a property and are just looking for a better deal.

_Andy_

Great - another person condoning fraud. Well done.

jamief

Lenders seem keen to get proper Employment references from borrowers just now; whether that be remortgages or new business.

One of the questions on most employment reference forms (for your Employer to complete) is "is this employee subject to redundancy proceedings" with possible answers yes/no/not company policy to comment.

In effect, this makes the original question moot; assuming the lender does their due diligence and gets an employment reference, they should find this out.

betmunch

Cracking advice from Natalie7.

First post and already saying its ok to lie on a mortgage aplication!

If the lender asks, which they will, then you must answer it honestly.

Just incidentally what do you think would happen if you have exchanged contracts, but the lender finds out you lied before the completion of the loan?